Nutella jars with their recipients’ names on the labels were a hit. Picture: Mark CallejaSource:News Corp Australia

JB Hi-Fi bought out The Good Guys in September, prompting aggressive discounting by Harvey Norman as it battled to steal back a bigger slice of the market.

Citi’s analysts noted that the average cost of a television sold at Harvey Norman has been cut by 30 per cent in the past three months, while JB Hi-Fi had kept its average discount at 9 per cent.

“JB Hi-Fi has been significantly more targeted with its promotional activity, focusing large discounts on a small range of [products],” the report said.

The retailer had “continued to benefit from the Dick Smith market share tailwind,” the report said, but “this benefit is now dissipating”.

Harvey Norman was expected to have delivered healthy sales growth in the December quarter, though it may come “at the expense of margins given the increased promotional breadth and depth”.

A LACKLUSTRE SEASON

Overall, the analysts said, it was a “lukewarm” Christmas trading period, with only modest sales growth, largely because 2015 had been such a good year.

Black Friday sales and the increasing number of online shoppers getting organised earlier in the year — necessary to ensure packages arrive in time for Christmas — had brought sales forward into November 2016 for many retailers.

Coles also suffered compared to Christmas 2015, when it wiped the floor with rival Woolworths, while Target engaged in a surprisingly high level of discounting of brands like Lego and Bonds, after proclaiming that it would focus on an everyday low prices strategy.

“Suppliers have noted that Target has been more promotional utilising high-low discounting strategies to stimulate sales,” the analysts said.

“The strategic positioning for Target remains unclear and is challenging given Kmart owns the consistent low price positioning in the market.”

And despite the popular perception that sales were starting earlier and earlier each year, Citi said its feedback was that “the extent of discounting pre-Christmas was similar in 2016 as it was in 2015”.